Full Summary of the course 'Innovation Management' taught by Professor Stijn Kelchtermans. Contains everything from the slides including my own notes and explanations of the figures, tables, etc.
Followed the course in the Master's Year of Business Sciences in Brussels campus of the Catholic Uni...
,Inhoudsopgave
Module 1: Introduction ..................................................................................................................................................... 3
What is Innovation ................................................................................................................................................................. 3
Creating Blue Oceans ........................................................................................................................................................ 3
Four types of innovation (Oslo Manual)............................................................................................................................ 4
Dynamics of Innovation..................................................................................................................................................... 4
The drivers of Innovation ....................................................................................................................................................... 4
Why the market for innovation fails and monopolists...................................................................................................... 4
Patterns underlying successful innovations ...................................................................................................................... 6
Innovator’s Dilemma ......................................................................................................................................................... 7
Solutions for the innovator’s Dilemma ............................................................................................................................. 9
The Triple Helix................................................................................................................................................................ 10
Module 2: Exploring Innovation ....................................................................................................................................... 11
Sources of Innovation ........................................................................................................................................................... 11
Prediction Markets ............................................................................................................................................................... 12
1. Why predict ......................................................................................................................................................... 12
2. The set-up of a prediction market ....................................................................................................................... 13
3. Pro’s and Cons ..................................................................................................................................................... 14
Lead User Innovation ........................................................................................................................................................... 15
Module 3: Executing Innovation ...................................................................................................................................... 16
Project Selection ................................................................................................................................................................... 16
The Innovation Tunnel .................................................................................................................................................... 16
Valuation of R&D projects throughout the funnel .......................................................................................................... 17
Beyond NPV: Real option Valuation ................................................................................................................................ 18
Managing teams and stars .................................................................................................................................................. 23
The scarcity of Star Performance .................................................................................................................................... 23
Why do Stars Matter? ..................................................................................................................................................... 23
The Challenge of Managing Stars .................................................................................................................................... 25
Innovation networks ............................................................................................................................................................ 27
The “Small world” phenomenon (= 6 degrees of separation) ......................................................................................... 27
Small World Networks è basics of Social Network Analysis .......................................................................................... 27
Small Networks foster creativity? ................................................................................................................................... 31
Networks as social capital for Innovation ....................................................................................................................... 32
System thinking .................................................................................................................................................................... 33
The wide-lens Framework ............................................................................................................................................... 33
Mapping Ecosystems............................................................................................................................................................ 36
Value Blueprints .............................................................................................................................................................. 36
Reconfiguring Ecosystems (about cars)................................................................................................................................ 38
Module 4: Exploiting Innovation ...................................................................................................................................... 40
Intellectual Property Rights .................................................................................................................................................. 40
Fixing The Failing Market ................................................................................................................................................ 40
Key IP Instruments .......................................................................................................................................................... 40
A detailed look at Patents ............................................................................................................................................... 41
Who uses patents............................................................................................................................................................ 45
Strategic Patenting by Firms ........................................................................................................................................... 46
The Big Picture ................................................................................................................................................................ 48
2
,Module 1: Introduction
What is Innovation
Creating Blue Oceans
Industry Analysis Framework? = 5 forces of competition (by: Michael Porter) (premium vs budget)
• Barriers to entry L H
• Substitutes L H
• Buyer power H H
• Supplier power / L
• Competitive rivalry H H
Advice in terms of competitive strategy: small vs. large firm
• Small: differentiation focused on niche in premium segment
• Large: cost leadership (focus on budget, more extensive segments = differentiated products)
= Strategy Canvas
(every colour is a differenct kinf of company; purple =
yellow tail. Yellow = Exclusive. Red = Budget wines)
x-axis = what consumers think is important
y-axis = how much do they offer that what consumers
find important
Factors of competition for wine: (and how YellowTail handled things)
Raise Reduce Eliminate
• Price • Complexity • Wine age
• Range • Above the line
• Prestige marketing
• Terminology
People would think the wine-market is already overcrowded and that there is no room to compete.
But: YellowTail did succeed è make wine more approachable for non-wine drinkers.
= Blue ocean strategy Red Ocean strategy
• Reach beyond existing demand • Focus on existing market space
• Identify non-customers • STP
• Identify commonalities • Make value/cost trade-off
• Unlock mass of buyers
• Break cost/value trade-off
!Innovation based strategies change the base of competition in an industry!
3
, Four types of innovation (Oslo Manual)
1. Product
= Introduction of good/service with improvements in functional characteristics
• Goods (new medicine)
• Services (video-on-demand)
2. Process (new packaging system)
= implementation of new/improved production/delivery method
3. Marketing
= new marketing method è product design + packaging, product placement, promotion
4. Organizational (first introduction quality management system)
Innovation ≠ technology = implementation of new/improved product, process, marketing method or
new organizational method (Oslo Manual = the standard)
è what is new? = new/significantly improved to the firm!
Dynamics of Innovation
è industries evolve over time
- For a Product = fast in beginning, slow over
time
- For a Process = other way around
è dominant design = initial phase of product
innovation. Firms in the industry have agreed
on how a product should look like. E.g. A
bycicle has 2 same-sized wheels, …
= Experimentation/product innovation è
dominant design è process innovation!
The drivers of Innovation
Why the market for innovation fails and monopolists
Are free markets good at creating innovation?
è Karl Marx/Friedrich Engels: ‘capitalism cannot exist without constant innovation: they have
created more colossal productive forces than al preceding generations together”
(GDP in UK sky-rocketed by the steam engine in 1848)
Economic growth (GDP) driven by technological progress?
Economic growth = Labour + Capital + Solow Residual
(= the part of growth not explained by the increase in the
amount of L and C) = tech growth + innovation
Relation: Innovation ó Economic growth
= major role!
4
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